Don’t Overlook Tax Returns for Your Gifts

Gifts

You must report 2012 gifts on Form 709 even if you don’t owe tax. Among other things, that’s so the IRS will know how much of the $5.12 million ($5.25 million for 2013) tax-free amount you have used so far.

April 15 is approaching fast, and the tax man is ready to collect. Just make sure you don’t overlook one important tax return – the one for any taxable gifts in 2012.

If you made any gifts in excess of $13,000 (that number is $14,000 for 2013) to anyone in 2012, then you must file a Form 709 Gift Tax Return. Period. In fact, a recent article in Forbes titled “Don't Gamble With Gift Tax Returns” considered this matter in detail.

The humble gift tax return is among the easiest tax document to forget, but it’s also one of the most important to get right. After all, the return is what the IRS uses to assess any possible gift tax. Even if you don’t actually “owe” any gift tax, you still must file the return.

Why?

Gift tax returns that raise red flags or don’t get filed in the first place can be audited just like any tax return. No audit is a good audit.

So, if this is new information to you and you are not ready to file your Form 709, then you can get an extension by filing a Form 8892. Perhaps you need more time to get everything properly documented.

The original Forbes article also has some pointers when it comes to extensions. However, any gift tax must be paid by April 15, if any is owed. Otherwise, you will be hit with interest and potential penalties.

This is a hot topic this year, since 2012 was such a big year for gifting.

To talk with an attorney about your estate planning needs, visit www.elderlawannarbor.com.

Reference: Forbes (March 22, 2013) “Don't Gamble With Gift Tax Returns

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